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How to deal
with your Insurance Agent?
Insurance transactions are quiet
confusing. A professional insurance agent should make
clear the complex insurance policies in an easy comprehensive
way. Furthermore, your agent should appraise your needs,
disclosure and recommend ways to save money while providing
first-rate insurance coverage for your business.
Agents & Brokers
Many individuals and business people
purchase their insurance coverage form the agents. The
insurance agents represent either specific companies
or group of companies. On the other hand, other individuals
and many businesses prefer buying an insurance policy
from a broker agent or from banks, which represent the
insurance agent directly in the marketplace. This is
because many businesses believe that with brokers they
can have an independent source of information. In this
way they can sample broad range of coverage available
and put mutually the best package for precise state
of affairs. Conversely, the consumer should remember
that the agent represents the insurance company or companies
he/she is appointed by. It's from them the broker agents
works for you. Both insurance and broker agents should
be approachable and respond to their customers needs.
How to select a representative?
How do you pick the right agent or
broker? Check with your relatives, friends, neighbors,
colleagues, especially with people who have difficulty
with claims and coverage. It will enlighten you with
the instructive work about how insurance representatives
react under such circumstances because they can get
you an idea about how they will respond to you when
you need their help in such cases. In general, consumers
should investigate about the potential brokers or insurance
agents in every possible way they can. An example can
be put forth to explain this, on request the Office
of Insurance Commissioner will tell the California consumers
about How many complaints have been filed against an
agent or a broker in California and whether that licensee
has faced disciplinary action in the past. Consumers
also have the rights to gather any kind of information
regarding a particular insurance agent / broker agent
confined to that locality. All this will help the client
to choose the perfect insurance agent from whom they
can buy an insurance policy and work out with the transactions
and other formalities in a smooth way.
The Office of the Insurance Commissioner
can help you incase when you have any queries or in
need of additional information about your rights as
an insurance commissioner. Call the Consumer Hotline at 1-800-562-6900
or visit the website at www.insurance.ca.gov.
Consumers: Dealing With
a Broker Agent
Introduction
This issue will give you a clear idea
of your rights when dealing with the insurance agents
and brokers after your purchase of insurance coverage
such an health insurance, etc. The information offered in this brochure will make you
aware of the tools you need to become a better consumer
with the following issues given below:
The Broker Agent license
Describing a Broker Agent
Choosing a Broker Agent
Helpful tips to the consumer
Review of the Broker fee rules, policies in accordance
with the laws.
The Broker Agent License
Californiahealthonline.com
regulates all the practices of a perfect insurance agent
and certifies guarantee justice of the products and
work to protect against deception. The Broker Agent
license is issued by the Department and is used to distinguish
two distinctive producers. The holder of a Broker-Agent
license can either act as a broker or as a prominent
insurance agent.
Describing a Broker Agent
An insurance agent is a person who
takes the responsibilities and acts as a mediator between
the consumer and the insurance company. The person functions
in a prospective way with the insured consumers in order
to arrange the insurance contract. The agent solicits,
negotiates and effects bond of insurance for the insurer.
The broker agent is paid with a commission by the insurer
for the services provided as a part of the insurance
company.
An insurance broker is an independent
person who explores the marketplace for a suitable policy
in the interest of the clients. The broker agent is
not an insurance company employee. The broker agent
represents you, the client of the insurance product.
A Broker-Agent can also charge the client with brokerage
fees for all the services you benefit. The broker agents
also receive their commission from the insurance company.
The new Broker Fee Regulations effective
from 23rd November 2000 has become successful for personal
lines policies. A summary of the Broker
Fee Regulations has been outlined in this issue.
The Department of Insurance broker
fee regulations include 8 major sections. The sections
and the most important provisions of each section are
mentioned in this issue.
Caution:
The descriptions give a broad view
of the actual requirements of regulations. The brokers
are responsible to act in accordance with the actual
regulations and not merely to the summary given in this
issue. The brokers should read and understand the actual
regulations clearly to avoid any mistakes in future.
Broker Fee Regulations Applicability
- The regulations outlined in this issue are only applicable
to personal lines. The regulations apply to dealers
and wholesalers, though wholesalers are exempt from
several requirements.
Definitions - The regulations define
the term "broker fee" - Any fees charged by insurance
afford to provide services that start after the transaction
of insurance.
Requirements - In order to charge a
broker fee, a broker - a licensed individual or organization
who transacts insurance on your behalf must meet the
following necessities:
The consumer agrees to pay the fees in advance after
the full disclosure of the insurance policy.
The brokerage fees must not be charged on a CAARP, FAIR
Plan, or low cost programs.
The broker is not a fixed representative of the insurer
with whom the coverage will be sited.
The broker should offer the consumer with a definite
disclosure form.
The consumer and the broker sign up a Broker Fee Agreement
that encloses secured standard information.
The broker is supposed to sustain a valid broker contract
on file with the Department.
The broker should reveal the existence of brokerage
fees at the instant of the original premium quote.
Disclosure & Agreement - The typical
disclosure and agreement must be printed in English
/ in any other language used by the broker to promote,
solicit or negotiate the sale and purchase of the insurance
policy. The disclosure and agreement signed or initialed
by the consumer must be reserved for 18 months after
expiration of the policy.
Unfair And Deceptive Acts And Practices
- The regulations reason the subsequent acts and practices
to be unjust and/or deceptive:
Deteriorating to offer the buyer with the standard disclosure
form.
Failing to complete all related portions of the broker
fee contract earlier than giving the contract to the
buyer for examination.
Failing to provide the buyer with a fulfilled print
of the broker fee agreement, signed by the buyer and
the broker, as early as possible.
Failing to place a buyer with an insurer with whom the
broker is fixed as an agent and exclusively bear the
responsibility to charge a broker fee.
Charging or endeavoring to charge a brokerage fee for
a renewal, endorsement, or other services, without having
disclosed the fees in the broker fee agreement.
Failing without delay to repay complete broker fee if
the broker acted unsatisfactorily or dishonestly consequential
with financial loss to the buyer.
If the broker did any of the
following despite the consequences of financial loss
such as:
Carelessly or deliberately misquoted the premium to
the resulting in an up rate.
Accepting an unlicensed employee to handle insurance
for, or on behalf of, the buyer paying the fee, where
the Insurance Code is obligatory that the employee should
be licensed.
Unsuccessful to repay undeserved premium as necessary
by Insurance Code section 393(a), apart from acceptable
Insurance Code sections 393(b) or 1735.5.
Inattentively or deliberately unsuccessful to set the
consumer's coverage within the time period indicated
to the buyer or within an appropriate conduct.
Carelessly or purposely fail to forward a consumer's
premium payment to an insurer or general agent, ensuing
in policy abolition.
Failed to reveal the reality of the insurer's periodic
expense plan, if one was accessible.
Failed to repay undeserved commission in the broker's
possession to the person to whom it is payable within
30 days of the undeserved commission being generated
due to modification or termination of coverage.
Failed to submit or submit an application to another
policy a premium finance company credit owed to the
consumer/borrower within 15 days or being paid the credit
from the premium finance company.
Discipline - Abuse of the regulations
is grounds to defer or cancel a license. The commissioner
may enforce disciplinary action for the misconduct and
nonfeasance with the principal terms addressed in the
regulations.
The Standard Broker Fee Disclosure -
The standard broker fee disclosure (Appendix A of the
regulations) should always be specified to a buyer.
The disclosure contains the following advice, and more.
The Broker fee is not set by law, and may be negotiable
between the buyer and the broker.
It is against the law or offensive for an insurance
broker to charge a fee for placing coverage exclusively
with CAARP or the FAIR Plan.
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Consumers may be permitted to a full refund of a broker
fee if the broker acted unsatisfactorily or fraudulently.
Uncertain arguments over non-refunded broker fees can
be promoted to the Department of Insurance for examination.
Consumers are permitted to attain and maintain a complete
copy of the disclosure and any broker fee contract they
sign.
The broker may obtain commission from insurance companies
for placing the consumer's insurance. The commission
is in an extra addition to any broker fee.
Consumers must obtain a copy of a premium finance disclosure
and agreement. Consumers must obtain and examine those
documents before signing a premium finance agreement.
Clients should ask the broker if the insurer recommends
an individual installment payment plan. Insurer installment
plans are often cheaper than premium financing throughout
a separate premium finance company.
If the broker is introducing health insurance coverage,
the broker must provide the consumer with a copy of
the current Department of Insurance pamphlet for health
Insurance. By signing the disclosure, the consumer grants
receipt of the proper pamphlet(s).
NOTE: This site will
not be able to present producers with the supply of
pamphlets.
The Standard Broker Fee Agreement -
The standard agreement (Appendix B of the regulations)
does not require to be used exactly. It can be customized,
as long as the customized agreement encloses all the
necessities of the typical agreement, and no incompatible
condition.
The consumer assigns the broker as the consumer's insurance
broker of evidence.
The broker fee agreement persists until termination
by either party.
The broker consents to signify the consumer sincerely
and competently.
Specify the amount of the broker fee, and also whether
it is refundable.
Broker may in the future charge consumer, and consumer
consents to pay, an extra specified fees for services
explicitly listed on the contract.
File the nature and sum of all fees accepted by the
broker that will be charged by persons other than the
broker or the insurance company.
Grant the Department of Insurance buyer assist with
the phone number.
It's necessary that the broker and buyer must sign and
date the contract/agreement.
Choosing a Broker Agent
Choosing a skillful, professional insurance
agent can be as significant as choosing your doctor,
accountant or any other professional upon whom you rely
on confidently. If you are opting a broker agent for
the first time the best way you can avail for the information
is to discuss the subject with your friends, neighbors,
relatives, co-workers and professional broker-agent
associations.
After choosing the broker agent, verify
the producers licensing status with the department.
Check the producer's license and other policies on the
Department's website or else you can approach the department
and collect the information.
The Producer Licensing Bureau of California
Department of Insurance is in charge of administrating
the essential requirements of the producers. From January
1, 1997 all the agents and brokers are expected to include
the Department of Insurance license number on business
cards, premier quotations and printed announcement to
the board. This will enable you to ensure their license
with our Department.
The following questionnaire would help
you to ask your relatives, neighbors or your colleagues
about the outcomes before choosing an insurance product
with the broker agent. It's an important issue to take
into respect especially in choosing someone who is going
to protect you, your family and your assets from an
impending financial loss.
The questionnaire is as follows:
Have they had a latest claim?
How did the producer / insurer act in response to the
claim?
Has the producer been considerate and prompt in answering
to all the questions, which you have felt ambiguous?
Did the producer take ample time to explain you clearly
the terms and conditions of the policies?
Does the producer periodically contact the insurance
agency to update the coverage?
It's a significant process for you
to choose a producer with whom you feel comfortable.
You need to have an easy access on the information regarding
open exchange about the coverage's and services available.
So this can assure you the benefits and what coverage
fits best with your needs. You should always keep in
mind one thing that the Broker Agent is not the person
to decide either the type of coverage you need. So make
your own choice and get the best outcome from it.
Helpful Tips to the Consumer
Here are some valuable suggestions,
which you can adopt before undertaking any insurance
policy with a broker agent.
Go through all the documents thoroughly before you sign
and date them.
Never make the biggest mistake of signing up a blank
document in order to avoid misunderstandings a possible
deception.
Ask the broker agent to explain the terms you are not
familiar with.
Take copies of the documents concerning your insurance
transaction such as:
Application
Binder
Receipt
Broker Fee Agreement
Premium Finance Agreement
Make clear applications / binder statements that reflect
the limits and deductibles of the coverage purchased,
name of the insurance company, expiration dates, and
other properties covered under the policy.
It's very important to be honest with your replies with
your answers with the insurance agent because any malpractices
can be discovered during verifications. If you give
inaccurate answers/omit any of the questions without
answering it may lead to delays, denial or recision
of the coverage in terms of the insurance industry.
You and the broker should not break the rules because
such actions may be prosecuted for fraud. Insurance
fraud is a misdemeanor in California.
Review of the Broker fee rules,
policies in accordance with the laws:
With respect to charge a brokerage
fee, a broker must concrete the following necessities
given below:
The consumer should agree to pay the fees in advance
only after the full disclosure.
The brokerage fees should not be charged on a CAARP,
FAIR Plan, or low cost programs.
The broker is not a fixed agent of the insurer with
whom the coverage will be placed.
The broker should provide the consumer with a specific
disclosure form.
The consumer and the broker sign up a Broker Fee Agreement
containing confident standard information.
The broker should maintain a valid broker contract on
file with the Department.
The broker should disclose the existence of brokerage
fees at the moment of the original premium quote.
Be careful and do not sign up any Broker Fee Agreement
unless the contract is fully completed with all the
respective data.
The law does not lay the brokerage fee and it may be
negotiable between you and the broker.
Broker fees once paid are not refundable, even after
the cancellation of the coverage. You may be permitted
to a full refund of the broker fee if the broker acted
unsatisfactorily or dishonestly.
You are permitted to attain a copy of the Broker Fee
Agreement.
You must obtain a copy of a premium finance disclosure
and contract in cases when your premiums are being financed.
You should verify with the producer about the installment
payment plan, as they are regularly less expensive than
premium financing through a premium finance company.
The words that are in italics are the
terms most frequently used with respect to the transactions
in the insurance industry. The explanation of the terms
is made clear in the Broker Insurance Glossary page.
Broker Insurance 1Broker
Insurance 2Broker
Insurance 3Broker
Insurance 4Broker
Insurance 5Broker
Insurance Glossary
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Posted in Healthcare Post Date 04/16/2020